Canaccord Genuity Morning Coffee on Spreadtrum (SPRD): Spread the Word
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Price: $30.93 --0%
Rating Summary:
8 Buy, 6 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
Rating Summary:
8 Buy, 6 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
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Canaccord Genuity Morning Coffee on Spreadtrum (Nasdaq: SPRD): Spread the word.
Spreadtrum reported Q4/11 sales of $192 million and EPS of $0.78, generally in line with guidance and Canaccord Genuity Technology Analyst Michael Walkley’s $191 million/$0.82 estimates. Consistent with his checks, sales were driven by strong TD-SCDMA unit growth as the migration from 2G to 3G handsets in China picks up pace, offsetting weakness in 2/2.5G sales to both India and China. However, with management changes at China Mobile causing a disruption to H1/12 growth prospects, Spreadtrum guided to Q1/12 sales of $158-163 million and gross margin of 38.0%, or below Walkley’s $165 million/40.5% estimates. Spreadtrum management estimates its TD-SCDMA market share is now roughly 57%, and management anticipates the TD-SCDMA market should grow from roughly 50 million units in 2011 to 80-90 million in 2012. Given its dominant share in TD-SCDMA feature phones and new TD smartphone products launching this quarter, Walkley expects Spreadtrum to maintain 50%+ share during 2012. In 2013, he expects significant TD-SCDMA market growth to drive unit growth for Spreadtrum, though he does expect its share to drop below 50% with new entrants including Qualcomm (Nasdaq: QCOM) in devices such as iPhone 5. Due to his lower unit assumptions, Walkley has reduced his 2012 EPS estimate from $2.89 to $2.00 and is introducing his 2013 estimate of $2.40.
Spreadtrum reported Q4/11 sales of $192 million and EPS of $0.78, generally in line with guidance and Canaccord Genuity Technology Analyst Michael Walkley’s $191 million/$0.82 estimates. Consistent with his checks, sales were driven by strong TD-SCDMA unit growth as the migration from 2G to 3G handsets in China picks up pace, offsetting weakness in 2/2.5G sales to both India and China. However, with management changes at China Mobile causing a disruption to H1/12 growth prospects, Spreadtrum guided to Q1/12 sales of $158-163 million and gross margin of 38.0%, or below Walkley’s $165 million/40.5% estimates. Spreadtrum management estimates its TD-SCDMA market share is now roughly 57%, and management anticipates the TD-SCDMA market should grow from roughly 50 million units in 2011 to 80-90 million in 2012. Given its dominant share in TD-SCDMA feature phones and new TD smartphone products launching this quarter, Walkley expects Spreadtrum to maintain 50%+ share during 2012. In 2013, he expects significant TD-SCDMA market growth to drive unit growth for Spreadtrum, though he does expect its share to drop below 50% with new entrants including Qualcomm (Nasdaq: QCOM) in devices such as iPhone 5. Due to his lower unit assumptions, Walkley has reduced his 2012 EPS estimate from $2.89 to $2.00 and is introducing his 2013 estimate of $2.40.
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